Professional Indemnity – How Coronavirus Could Impact Your Insurance

Coronavirus has left the business world racing to uncover what this means for the future. We’re undoubtedly heading for some rocky times. So, we need all the guidance we can get. As a business owner or professional, your thoughts are probably constantly turning towards how the outbreak may impact your business. In today’s blog, we take a look at how the outbreak might affect your business, in particular, your professional indemnity insurance (PII). Read on to find out more. 

What is professional indemnity insurance?

Professional indemnity, also known as professional liability, covers professionals against claims made by their clients for mistakes or negligent advice that leads to financial losses. Certain industry regulatory bodies require their members to hold PII, such as the SRA, ARB and ICAEW. 

The impact of coronavirus on businesses

The true impact of coronavirus on the UK and global economy is yet to be fully realised. However, it’s likely that this signals the start of another global recession, similar or worse perhaps than we experienced back in 2008-2009. 

Previous recessions saw an increase in professional liability claims, made as a result of business failures relating to the crisis. 

People are unsure what to do. Many are making rash decisions, moving assets and funds around, while desperately trying to find new ways to work. All while dealing with bills to pay and various cash flow problems. The fallout from this crisis may well look like more professional indemnity claims as people try to recover their losses in any means necessary.

Fortunately, many professional bodies are offering support and guidance to their members. The SRA and RICS have both published guidance for their members on renewing their liability insurance during this time. 

In the aftermath of the virus, experts are predicting a rise in business failures, as a result of businesses scrambling to adjust their processes and ways of working in order to keep afloat. This will lead to an increased risk of professional liability claims. 

Having the right PII cover is more important now than ever before. With many businesses finding they are unable to recover losses through their business interruption insurance, many will be turning to their professional advisors to recoup costs where possible. 

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Renewing your professional indemnity insurance

For the past 18 months, the professional indemnity market has become ‘hardened’. Meaning that insurers are more focused on looking after their existing clients than on new business. Good news if you are planning on renewing with your current insurer. However, some industries may see higher premiums on their PII cover, while others might see reductions in the cover available. For some markets, insurers have pulled out altogether. 

If you’re due to renew your policy soon, be prepared. Insurers are likely to be much more vigilant around your business’ risk management systems, especially any changes made in the light of COVID-19. They’ll be taking a closer look at any business continuity or preparedness plans to ensure your business has adequate risk management systems in place. Don’t be surprised if you get asked to provide more information on how your business is responding to the crisis. Professional bodies such as the SRA are advising businesses to start their renewal process at least a couple of months ahead of the renewal date, to account for slower processing times. In fact, the SRA has stated that solicitors who are unable to renew their policy due to delays can apply for an extension.

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COVID-19 policy exclusions

Some insurers are currently applying COVID-19 related exclusions to policies, due to the rise in claims made because of the virus. It’s important to review these exclusions with your insurance broker as these can be open to interpretation.

Should I stop or reduce my cover?

In times such as these, with reduced income and financial uncertainty, businesses will be looking to cut costs. However, with the expected rise in liability claims, pausing or reducing your professional indemnity cover is not advisable. Cover is needed to protect already vulnerable businesses from the potentially devastating impact of such claims. 

If money is really tight, discuss with your broker to find a solution that will allow you to keep your cover in place at a time when it is so necessary. Perhaps you could agree on reduced premiums, or move from a large annual payment to more manageable monthly payments. 

Ultimately, cancelling your professional indemnity insurance leaves your business open to greater risks. Which is not a risk worth taking. 

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What if I have had to close my business?

If you’ve been forced to close your business, you may be considering stopping your PII cover. However, this can still leave you open to potentially expensive claims. PII works on a ‘claims made’ basis, meaning that you need to have cover in place at the time of the claim, not just when the particular incident occurred. 

If your business is sadly closed for good, it is wise to invest in run off cover, which can protect you against historic claims. Run off cover can last for up to six years and can be extended beyond that if considered necessary.

Risks for different industries

Legal firm DAC Beachcroft recently published a report on the potential impact of COVID-19 on professional liability across a range of industries. Below are some possible claims that could  arise against different professions in the wake of the virus.

  • Failing to properly advise on tax relief and grants for businesses
  • Failing to identify tax relief abuse
  • Incomplete auditing processes (due to being unable to visit clients)


  • Project delays
  • Poor quality workmanship due to key personnel not on site
  • Unfulfilled inspection duties 
  • Unsafe sites
  • Poor design quality


  • Misselling investments
  • Increase in financial crimes and fraud
  • Data breaches
  • Transaction delays


  • Insufficient cover


  • Missed court deadlines
  • SRA compliance
  • Improper case handling due to remote working


  • IT system weaknesses
  • Project delays 

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What should I do now?

To protect yourself and your business, experts advise the following:

  • Stay up to speed with COVID-19 guidance, including changing market standards
  • Be consistent in decision making
  • Identify potential delays or issues, including associated costs, to be aware of potential claims
  • Study any claims against you thoroughly and respond accordingly
  • Keep detailed notes of your work
  • Review internal processes and policies


Most importantly, keep your insurer or insurance broker informed of any changes to your business. They will be best placed to advise you during this time.

To speak to an experienced insurance broker about your professional indemnity insurance, contact [broker_name] on [broker_phone] today.


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